Global Cloud Xchange (GCX), the submarine cable subsidiary of debt-laden RCom, has filed for bankruptcy protection after it missed payment on its $350 million of 7 per cent bonds that matured on August 1. The company, which has filed for protection in the United States Bankruptcy Court for the District of Delaware under Chapter 11, is also scouting for prospective buyers under a sale process.
GCX, which owns the world’s largest private sub-sea cable system, expects to complete the process within the fourth quarter of 2019. The move comes at a time when RCom, a company controlled by Anil Ambani, is facing proceedings in India under the Insolvency and Bankruptcy Code (IBC). RCom owes over ₹40,000 crore to lenders and has shut down its mobile services.
The company’s international telephony unit has now initiated a voluntary case under Chapter 11 restructuring with support from more than 75 per cent of lenders. The proposed plan of reorganisation positions the firm “to aggressively pursue growth and development with $150 million in bond debt reduction, new working capital financing and strong new ownership,” the company said in a statement.
GCX and 14 affiliated debtors filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware on September 15. The process has been initiated to continue serving its customers as usual, it said.
“Upon emergence from this process, the company expects to be well-positioned to aggressively pursue its business plan independent of the overhang caused by its corporate parent’s challenges,” it said, adding that to ensure maxim value for stakeholders, GCX will use the protections and framework of Chapter 11 to undertake a sale process to prospective buyers.
GCX owns the world’s largest private undersea cable system spanning more than 68,000 route km
Forbearance agreement
Earlier in July, in a sign of trouble brewing at GCX, the sub-sea cable firm said it was in discussions with the largest bondholders to seek a forbearance agreement enabling time to discuss options related to the maturity of the bonds.
This came after a prospective private loan provider said it would not be proceeding with the loan on a timetable that would have allowed the company to repay the bonds at par at maturity.